1. Field of the Invention
This invention relates to data processing and, in particular, conducting an auction for an advertising impression.
2. Description of the Related Art
Advertisers try to reach consumers in a variety of ways. One of those ways is through web-based advertising on the Internet. A common way for advertisers to reach consumers on the Internet is by presenting ads in web sites, either as a pop-up window or embedded within the web page being viewed by the consumer. Web sites, such as MSN, MySpace, and Yahoo, rely on advertising as an increasingly important source of revenue. But unless advertisers realize returns from advertising on a web site (e.g., in the form of a purchase or a visit to the advertiser's web site), advertisers may reduce or even stop advertising on the web site. Accordingly, web sites have an interest in selecting an ad that generates revenue for the web site and provides some form of return to the advertiser. In addition, when an advertiser offers to buy advertising in one market, it may be desirable for such a market (or the advertiser) to attempt to secure an impression to fulfill this offer to buy at the minimum price possible in a second market (e.g., for an impression offered by a third party). Likewise, it may be desirable for a market to offer its impressions to other markets in order to maximize competitive bidding for the impression. In this regard, prior art advertisement selection processes fail to provide an acceptable methodology for securing bids across multiple markets that each have different advertisers offering to buy impressions at different prices. To better understand the problems of the prior art, a description of prior art advertisements and the selection and determination of advertisements is useful.
Advertisers may try to reach consumers by presenting commercials or advertising in broadcast programming (e.g., on televisions) or on portable devices (e.g., personal digital assistants, cellular phones, etc.). Similar to advertising on websites, advertisers expect a return on their investment associated with placing advertisements into or part of programming If the advertiser doesn't realize a return, the advertiser will be less inclined to (or will no longer) purchase advertisements from the broadcast network (thereby decreasing a broadcast networks revenue). Accordingly, broadcast networks (e.g., FOX™, CBS™, cable networks, etc.) have a desire to select ads that generate revenue for the network as well as provide some sort of return to the advertiser.
Similarly, the wide-spread adoption of small thin client devices such as cellular phones has expanded the capability to access the internet and receive advertisements on such devices. It is desirable for cellular or local networks on which the thin client devices are operating to select ads that generate revenue for the network as well as provide a return on investment to the advertiser. Alternatively, the content provider may have such desires.
Many advertisements are sold on a “2nd price auction” (i.e., “fair market value” or “dynamic pricing”) basis, where the advertiser offers to pay one price in an asynchronous auction (bids are placed ahead of the impressions actually occurring). The price could be on a CPM (cost per thousand impressions), CPC (cost per click), CPA (cost per action such as a purchase) or other basis. This price represents a maximum price. If the price is not a CPM price, it is converted to a predicted CPM based on past experience using the proprietary algorithms of that platform. An advertisement is selected (probably the highest such CPM, but other factors such as pacing come into play). The selected advertisement is compared to the next highest such bid plus some spread (e.g., plus 5% or plus $0.05) and a ratio is computed between this and the original CPM for the winning ad. The price actually charged is the lower of the actual bid or the actual bid multiplied by this ratio.
For example, suppose advertiser A placed the highest CPM bid of $1. Further suppose that advertiser B placed the second highest bid of $0.50 with a spread of 5%. Advertiser A is charged 0.525/1*1=$0.525.
Other types/variations of second price auctions may also be used. For example, the price actually charged could be the second best or second best plus a fixed amount (e.g., one penny, etc.).
With second price auctions, an issue arises when the marketplace (that conducted an advertisement selection as described above) is attempting to secure an advertisement in another market (e.g., using a real-time bid auction [see detailed description below]) by bidding against inventory in the other market. For example, suppose market A conducts the above described auction. Further suppose that market A sends the resulting bid ($0.525) from advertiser A to market B to try and win an impression in market B. However, in market B, assume advertiser C has placed a CPM bid of $0.75. Accordingly, advertiser C may win the auction and is charged $0.75 even though advertiser A was willing to pay $1. Accordingly, the prior art fails to provide a mechanism for securing advertisement impressions across multiple markets.